Geithner unsure on TARP impact

Treasury Secretary Timothy Geithner on Thursday said his department is still examining whether potential manipulation of the Libor benchmark interest rate hurt taxpayers because it was used as part of programs tied to the controversial 2008 bank bailout law.

Geithner has said in recent days that he was concerned about how the rate was being set as far back as 2008 when he was president of the New York Federal Reserve Bank. This has led lawmakers at hearings this week to question why, despite these concerns, he and others in the government chose to use Libor to help determine how much financial giants that took bailout funds through the Troubled Asset Relief Program (TARP) and other programs would owe the government.

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Geithner was pressed on the issue Wednesday by Sen. David Vitter (R-La.) at a Senate Banking Committee hearing.

“In a series of specifics programs that the Fed and Treasury undertook in the financial crisis, we like many investors used Libor as a reference rate,” Geithner said. “In many ways we were in a position of investors around the world which was we had to make sure of the best available rate at the time.”

“You’re raising the concern of, ‘Were we disadvantaged by that?’ We don’t know whether we were or not,” he told Vitter.

The rate, which is set in London, measures the cost of borrowing between banks and affects a range of consumer loans, including some mortgages and credit cards.

Last month, London’s Barclays bank was hit with hundreds of millions in fines by U.S. and British authorities for its role in the scandal, which could grow bigger as authorities examine whether others were involved, including three U.S. banks – Citigroup Inc, Bank of America Corp and JPMorgan Chase & Co.

On Thursday, Geithner said he did not know what role U.S. banks played in any rate manipulation and said senators should send their queries to the Justice Department and regulators.

Geithner has faced numerous questions from lawmakers this week about his involvement in the Libor controversy during his time as head of the New York Fed.

He has insisted that he took “fully appropriate” actions four years ago by alerting regulators in both the U.S. and the U.K. when he first became aware of the potential problem – a point that he reiterated to senators on Thursday.

Some Democrats have come to his aid this week during hearings before the House Financial Services and Senate Banking committees.